India’s office market achieves record absorption last year

V Nagarajan

India’s office absorption increased by nearly 16 per cent year-over-year (YoY) to touch 79.0 million sqft last year, a historic peak for India’s office market.

Absorption in 2024 was led by Bengaluru with about 28 per cent share, followed by Hyderabad, Mumbai, Delhi-NCR at 15 per cent each.

In 2024, about 52.3 million sqft of new completions were witnessed, with a decline of 9 per cent YoY.

In 2024, technology companies witnessed an uptick in office space absorption, accounting for a share of 24 per cent in the overall space take-up, followed by flexible space operators (19 per cent). BFSI firms (16 per cent) and engineering and manufacturing (E&M) companies (9 per cent).

Domestic firms continued to lead the last year’s space take-up with a share of 45 per cent. Leasing by Indian firms was primarily driven by flexible space operators, technology firms, and BFSI corporates during the war.

India’s real estate market experienced a heightened phase of expansion and transformation in 2024, positioning it as a standout year in the sector’s history. Despite challenges such as monetary tightening and local uncertainties, the market performed better than anticipated.

The country’s economy showcased resilience throughout the year and is expected to carry forward this positive momentum into 2025, driven by robust domestic growth and continued investments.

GCCs maintained a strong presence in 2024, contributing 35-40 per cent of the overall leasing activity in India and registering an over 20 per cent growth compared to 2023.

Global firms have actively established and expanded their GCC operations by capitalising on the country’s skilled talent pool and a favourable business climate. This growth momentum is expected to persist into 2025, with new entrants setting up global centres and existing firms scaling their facilities.

In addition, a diversified occupier base, fuelled by economic growth and strategic policy measures, would shape India’s office space absorption trends in 2025.

Leasing activity from sectors beyond technology, increasing contributions from emerging markets, and the growth and consolidation of domestic firms’ portfolios are poised to drive the country’s office market.

Investment-grade supply to accelerate shift to future-proofed assets and enhanced employee experience. India’s office supply pipeline is projected to remain strong in 2025, with the anticipated introduction of several high-quality, investment-grade assets. Bengaluru, Hyderabad, and Delhi-NCR are expected to lead the completions, followed by Pune, Mumbai, and Chennai.

The December 2023 policy allowing partial denotification of special economic zone (SEZ) assets is likely to lead to wider options for occupiers as such spaces come into mainstream supply.

The strong office leasing witnessed in 2024 has resulted in reduced vacancies across key micro-markets. An anticipated demand surge in 2025, would likely exert downward pressure on vacancies and result in rents rising across key micro-markets.

The focus on sustainability is set to shape office developments in 2025, with green building practices becoming increasingly prevalent. LEED and IGBC-certified buildings are expected to become the norm, driven by the dual requirements of operational efficiency and regulatory compliance. Developers are likely to emphasise eco-friendly construction methods, sustainable materials, and energy-efficient designs to cater to environmentally conscious investors and occupiers.

Government initiatives, including tax incentives, are set to encourage the adoption of sustainable real estate practices, making green development more attractive to builders. Reflecting this trend, over 60 per cent of the office supply pipeline over the next two to three years is anticipated to be green-certified, highlighting the industry’s shift towards environmentally responsible construction.

I have invested in a project but cancelled it subsequently. Can I repatriate the amount? Priya Kumat, Sharjah.

Authorised dealer banks may permit repatriation of amounts representing the refund of purchase consideration for cancellation of booking together with interest provided the original payment was made out by NRE/FCNR (B) account of the NRI. This is subject to the stipulation that the authorised dealer is satisfied about the genuineness of the transaction. It can also be credited to NRE/FCNR (B) account if NRI/PIO desires to do so.

I have inherited family assets by way of gift. I wish to repatriate by selling the asset. Are there restrictions? Vinod Sajnani, Dubai.

You can mortgage the commercial property to an authorised dealer/housing finance institution in India without the need to get any approval from the authorities. You can also mortgage to a party abroad but with prior approval of Reserve Bank of India.